Milford firm tangled in N.Y. political row

Published 1:00 am, Friday, January 23, 2009

ALBANY, N.Y. -- A federal grand jury Friday indicted former state Senate Majority Leader
Joseph L. Bruno
on felony charges, alleging he used his elected position to extract $3.2 million in private consulting fees from clients who sought to use his influence.

A defiant Bruno, who is the sole person charged in the eight-count indictment, criticized the U.S. Attorney's Office and an "overzealous" FBI for conducting what he characterized as a "politicized" criminal investigation of his business dealings.

During a brief news conference following his appearance in front of a federal magistrate, Bruno vowed to go to trial and fight the charges and accused federal authorities of conducting "a three-year fishing expedition that . . . stinks."

If convicted on any of the charges, the 79-year-old Republican faces a maximum sentence of 20 years in prison, although under federal sentencing guidelines he would likely face much less time behind bars.

The indictment outlines a series of deals and business arrangements dating back to 1993 in which Bruno made money from companies or individuals who had an interest in state government or profited as a "consultant" for steering labor unions, which rely heavily on state government contracts, to invest in companies that were paying Bruno hundreds of thousands of dollars.

The charges also delve into Bruno's penchant for race horses and several shadowy deals.

But it was Bruno's relationship with a Connecticut investment firm and his efforts to steer
New York labor union

leaders to invest their pension funds there that brought him the most private wealth, more than $2 million, according to the charges.

While New York state legislators are part-time officials and permitted to pursue employment or business activities, the indictment alleges Bruno improperly exploited his official position and concealed conflicts of interest with his private 'consulting' business," Baxter said.

The indictment describes "schemes" involving use of his public office to convince labor unions to steer their money management to Wright Investors Service, a Connecticut firm that paid him nearly $1.4 million from 1994 to 2006, and to McGinn, Smith & Co., an Albany investment firm that paid Bruno $632,116 from 1993 to 2005.

The firms received investment advisory fees or brokerage fees paid by the union benefit funds. Bruno did not perform legitimate consulting services commensurate with the substantial consulting fees, "which were in essence gifts," Baxter said.

Pikus pledged his office will continue to investigate other allegations of wrongdoing in state government.

Bruno, dressed in a blue pin-striped suit, walked into a packed courtroom on the fourth floor of the
James T. Foley
federal courthouse and introduced himself to the lead prosecutors on his case,
Elizabeth Coombe
and William Pericak, shaking their hands and exchanging brief pleasantries.

He then sat at a defendants table and pleaded not guilty through his attorney, William Dreyer.

U.S. Magistrate Judge
David R. Homer
released Bruno on his own recognizance, and Bruno quickly left the courthouse and jumped into a waiting Mercedes that whisked him away.

Bruno, who reigned for years as one of the most powerful lawmakers in New York, is charged with using his office to deprive the public of the honest services of government. The indictment marks the culmination of a three-year FBI investigation into the dealings of a storied politician who emerged from a childhood of poverty to become an iconic political leader.

Bruno retired from his state Senate seat in July after 32 years in legislative service. He is now a lobbyist. The indictment lays out Bruno's alleged deceptions, such as not disclosing his dealings to ethics authorities.

It The indictment describes "schemes" involving use of his public office to convince labor unions to steer their money management to Wright Investors Service, a Connecticut firm that paid him nearly $1.4 million from 1994 to 2006, and to McGinn, Smith & Co., an Albany investment firm that paid Bruno $632,116 from 1993 to 2005.

The firms received investment advisory fees or brokerage fees paid by the union benefit funds. Bruno did not perform legitimate consulting services commensurate with the substantial consulting fees, "which were in essence gifts," Baxter said.

Pikus said the case was complicated because of the veil of secrecy over a state government that makes it nearly impossible, even for the FBI, to trace the origin of legislative decisions.

The investigation dogged Bruno during the last two years of his political career, as information surfaced publicly about the FBI's deep foray into his real-estate dealings, investments, political decisions, and his ownership and breeding of thoroughbred horses.

The ''honest services" provision of federal statutes has been used repeatedly by federal prosecutors to take down some of the nation's corrupt government officials and lobbyists.

The broadly written law, which Congress inserted into federal statutes 20 years ago, prohibits public officials from using the mail or interstate communications to deprive the public of an inherent "right to honest services."

The law has become a favored weapon of many prosecutors because it does not require a quid pro quo, which is often difficult to prove in the world of pay-to-play politics, where multimillion-dollar deals and campaign fund payoffs are known to be arranged with winks and nods.

"This is not the first time we have seen deeply flawed, dysfunctional or even illegal behavior by those with prosecutorial power," said Bruno, adding he looks forward to a public trial.

The investigation began when FBI agents from a white-collar crime unit in Albany began examining a series of private jet flights provided to Bruno by people with whom he did business both politically and privately, a source close to the case said.

The chartered jet flights, in some cases worth thousands of dollars per hour, ferried Bruno to private vacations in South Florida, political fundraisers, government functions, and at least once to Kentucky horse country.

The FBI's examination expanded to bank records related to a private consulting firm Bruno ran from his Brunswick, N.Y., home. The hundreds of thousands of dollars that Bruno was paid through that firm serve as the foundation of many of the counts in the indictment.

Bruno abruptly resigned from that firm,
Wright Investors Service of Milford, Conn.
, last year. He has repeatedly declined to disclose how much he was paid as its employee and has refused to identify his personal consulting clients.